First American Profit Misses on Canada IssueThursday, April 28, 2011
Santa Ana-based title insurer First American Financial Corp. reported a lower than expected adjusted quarterly profit as it reworked and shored up a policy offered in Canada.
First American reported an adjusted profit of $11.9 million, which fell short of the $16.3 million analysts were expecting on average.
The profit was hit by a $27.2 million charge that came as First American set aside money for a guaranteed valuation policy designed to protect lenders in Canada.
The money losing policy is being reworked, according to First American.
The company, which writes insurance policies protecting real estate buyers against competing claims of ownership, also said it was hit by a rise in U.S. claims.
First American’s first-quarter revenue rose 3% from a year earlier to $932 million.
That topped the $904.6 million Wall Street was expecting.
First American closed 222,200 title insurance orders in the quarter, a drop 8% from a year earlier.
“Given the slow start to the year, we continue to actively manage expenses,” Chief Executive Dennis Gilmore said. “We will be prudent in our expense management efforts, as we believe mortgage and real estate markets are near a bottom."
First American emerged last year in a split of its former parent, First American Corp.
The move also created Santa Ana-based CoreLogic Inc., a provider of data to real estate and mortgage companies.
First American Financial has had to deal with the challenges of the topsy-turvy mortgage and real estate markets.
Earlier this year, the company warned of an uncertain, challenging year as the real estate market looks to shake off a prolonged downturn.